Fundamental Overview
The USD got another boost on Friday following the NFP report as the data beat expectations by a big margin almost across the board. The market scaled back the rate cuts expectations further with now just one cut expected by the end of the year.
The focus remains on inflation and this week we get the US CPI report on Wednesday. This is the most important event of the month. Another hot report will likely cause some trouble in the markets with the stock market looking as the most vulnerable right now.
The best outcome would be a soft report given the overstretched moves in the markets caused by the repricing in rate cuts expectations. That would likely reverse most of the recent trends and trigger a rally in bonds, risk assets like stocks and bitcoin and lead to a selloff in the US Dollar.
On the CHF side, the SNB cut interest rates by 50 bps at the last policy meeting bringing the policy rate to 0.50% and dropping the language signalling further cuts in the coming quarters. This suggests that the central bank will likely slow the pace of easing which is something that the market was already expecting with two 25 bps cuts priced in for this year.
The Swiss CPI last week didn’t change much for the central bank as the data came basically in line with expectations.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF extended the rally above the 0.91 handle and came close to the 0.92 handle. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.87 handle next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor trendline defining the bullish momentum on this timeframe. The buyers will likely keep on leaning on it to position for further upside, while the sellers will look for a break lower to target a drop into the major trendline.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor trendline. The buyers will likely step in around these levels to position for an extension into the 0.9250 resistance, while the sellers will look for a break below the trendline and the 0.9130 level to target the next trendline around the 0.91 handle. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow, we get the US PPI data. On Wednesday, we have the US CPI report. On Thursday, we get the latest US Jobless Claims figures.
